Everyone is wondering, “How will interest rate increases effect both buyers and sellers?”
We’ve pulled together some statements from industry experts to help keep you informed!
Business Insider provides a general rule of thumb – every percentage point increase in interest rates corresponds to a 10% decrease in purchasing power. In other words, a buyer who could afford $2,000 monthly payments on a $414,000 home with a 3% mortgage, could only afford a $320,000 house with a 6% mortgage.
Jacob Channel, LendingTree’s senior economist states, “Though it’s unlikely that home prices will majorly slump, an increase in housing supply will likely significantly slow home price growth and give would-be buyers more housing options to choose from.”
Mark Zandi, the chief economist at Moody’s Analytics, says, “I don’t expect a collapse in house prices,” he says. He is not predicting a housing crash anything like what we saw 15 years ago, because of two fundamental forces supporting home prices.
The fundamental forces supporting current home prices are:
1. Supply – there is a shortage of homes available
2. We no longer have reckless mortgage lending – people can afford their loans.
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